No more ‘unlimited’ concessions for investors – Verwey

Stringent systems have been put in place to ensure concessions will no longer be recommended and granted in a “limitless” manner to “preferred, big-monied” investors.
This is according to the Chief Executive Officer (CEO) of the Guyana Office for Investment (Go-Invest), Owen Verwey.
In an interview with this newspaper, Verwey acknowledged that the entity was used in several instances by businessmen who did not use their concessions for the intended purpose.
He also noted that unlimited tax breaks and concessions used to be granted in the past. Verwey said that this practice occurred for several reasons. The CEO cited the lack of controls and proper processes and systems being in place as contributing factors. Now that this has been corrected, Verwey said that concessions will be granted based on the scale of the business as stated in the investment agreement.
“There is a process in place for an application for concessions. By this way, we can see what exactly is being applied for, whether it is furniture, tools, vehicles or machinery. We can assess for example that if your operation is 1200 acres, then you don’t need a concession agreement for an unlimited amount of excavators or even 15. So I assure you, we have certainly stepped up the due diligence aspect. This will help us to make the determination of what is reasonable or fair for the business.”

Go-Invest CEO, Owen Verwey

Furthermore, Verwey told Kaieteur News that monitoring mechanisms have been put in place to “keep an eye on investors”. He revealed that investors now have to submit a form by November of every year, stating how they used the concessions granted.
The CEO of Go-Invest also revealed that along with stricter due diligence of applications for incentives, there are regular meetings with the Guyana Revenue Authority (GRA) to discuss each application.
Verwey disclosed that GRA and Go-Invest are joining forces to monitor concessions on the ground.
“It should be noted that the authority rests with the GRA to revoke concessions because they are granted by GRA. Also, every Investment Agreement is recommended by us and by GRA, but approved by the Ministry of Finance. Monitoring responsibilities are now shared between the GRA and Go-Invest. We have been doing joint physical monitoring between the two bodies’ enforcement teams.”
Verwey said that the joint effort is to ensure that there is no abuse of the system and that it was a legitimate application that was processed.
He reminded that the abuse of the system was well documented in a forensic audit on the entity.
Forensic auditors of Nigel Hinds Financial Services discovered that in several instances, some businessmen used GO-Invest to obtain incentives and tax breaks on certain products, only to keep them for their personal use.
In their report, the auditors said that the entity is a conduit for corporations and other businesses to obtain tax concessions.
“However, there is evidence that despite the fact that concessions were granted to many investors, little or no business activity related to the Investment Agreement took place,” expressed the auditors.
They added, “In some instances, GO-Invest was used by businessmen as an opportunity to obtain products without paying import duty and other taxes, then reselling the goods or keeping them for personal use.”
Also contributing to the abuse GO-Invest opened itself to, was the fact that its system for filing was in an inexcusable state.
In this regard, the auditors said that the unsatisfactory state of the filing system at GO-Invest contributed greatly to the inability of management to provide timely and accurate information regarding the operations of GO-Invest. In many instances, the auditors said that documents placed in an investor’s file were not bound, resulting in missing documents.
The auditors said that in some instances, files examined were not properly indexed, so there is no way of knowing what should actually be in the file. It was noted that the movement of files were not always documented, thus making it difficult to locate files in a timely manner. At the time of its report, the auditors said that files for Zhonghao Shipyards Inc. and Atlantic Network Inc., could not be found by officers of GO-Invest.
The forensic auditors also criticized the lax manner in which GO-Invest treated investment agreements for some businessmen.
The auditors said that in many instances, files examined had un-dated draft Investment Agreements, which undermined the integrity of the documentation process for a key area of GO-Invest responsibilities. The forensic auditors said that this opened the verification and review process to opportunities for forgery and undermined the use of an audit trail.
The auditors said that there was no indication that Go-Invest complied with Section 41 of the 2004 Investment Act which requires annual recommendation to the government for alteration to the regime of fiscal incentives as detailed in Section 2 of the Income Tax in Aid of Industry Act of 1994.
Additionally, the auditors said that the Investment Act of 2004 made the Guyana Office for Investment, the primary investment agency in Guyana. The auditors said that it is unfortunate however that GO-Invest does not have a comprehensive database of investments made in Guyana.
In this regard, they made reference to the fact that Kaieteur News carried an article where the former CEO of GO-Invest Keith Burrowes admitted that “Go-Invest can only account for 10% of the investments made in the country”.
Also, the auditors said that the management of GO-Invest acknowledged that some investment agreements falling within their range of investments for consideration were done directly by the Office of the President.